Policy Vets

600 Billion Dollars in Federal Procurement Dollars each year - How much of that goes to Veteran Owned Businesses?

August 06, 2021 Policy Vets with Dr. David Shulkin and Louis Celli Jr. Season 1 Episode 19
Policy Vets
600 Billion Dollars in Federal Procurement Dollars each year - How much of that goes to Veteran Owned Businesses?
Show Notes Transcript

Barbara Ashe is the Executive Director for a program that teaches veteran businesses how to tap into the multibillion dollar federal sales market.  The Department of Veterans Affairs 2022 budget request is 270 billion dollars.  Find out how much of that will get spent on goods and services, and what type of priority veteran businesses have when selling to VA.

Barbara Ashe:

You'll spend 1000s of dollars if not millions pursuing an opportunity through the business development and capture process and then the proposal process. It could some proposals are 1000 pages long, and only one usually wins. So, you know, that's a lot of investment. The the government actually has an expectation that that you can do all that from day one, or don't even waste my time.

Announcer:

Welcome to the policy bets podcast, engaging with leaders and scholars and strong voices to fill a void in support of policy development for America's veterans. With your hosts, former Secretary of Veterans Affairs, Dr. David shulkin, and former executive director of the American Legion, Louis Celli, today's guest, Barbara, director and founder of the veteran Institute for procurement.

Louis Celli:

And, Mr. Secretary, when when you were at the VA, what was your budget?

Dr. David Shulkin:

It was a little bit over $200 billion a year

Louis Celli:

$200 billion a year. So how much of that were small businesses able to actually compete for and try to sell things to the government?

Dr. David Shulkin:

Well, you know, the one of the things that people don't understand when I was secretary, the Supreme Court ruled a new ruling called kingdom where that essentially gave preferential access to service disabled veterans. And in fact, they were looked at for every contract to see if they could offer those services first. So the numbers were growing considerably. But, you know, $200 billion a year is really an inconceivable amount of money. And, frankly, this is an area that I think continually needs to be looked at, to make sure that this is going to be a sustainable type of agency for decades to come.

Louis Celli:

Yeah, no, no, I remember that. I remember that ruling. And I remember why the law was put into place in the first place. It was actually the the Veterans Affairs Committee for the house to house Veterans Affairs Committee, because the federal government had always, not always since the late 90s. Had a 3% mandate that was supposed to target, you know, small businesses owned by veterans, and they just they never met it. They just never, you know, they never honored that. So the VA committee decided that they were going to put a special rule in place, at least for VA, because that was the only agency that they had jurisdiction over. And for a while the VA didn't do it either. So yeah, Kingdom were was was a pivotal point in procurement. For for veterans of VA. Yeah,

Dr. David Shulkin:

my mind, this is always the problem in Washington and agency doesn't take its responsibilities seriously. Congress comes in and legislates things that has unintended consequences. And before you know it, you have a system that frankly, people can't remember why it was put in place in the first place. And and it has lots of abuses and lots of things that really never intended. I think everyone supports the fact that the VA should be allowing veterans, the ability to contribute back to other veterans, but mandating or regulating the way that you have to do purchasing causes a lot of problems and frankly, may not be the most efficient way of spending taxpayer money.

Louis Celli:

Well, let's talk about spending that money. And you talked a little bit about sustainability a minute ago, and a lot of that money goes straight out into the, you know, into the community for purchased care, right and purchase care. They don't you know, they don't ask whether the physician is a veteran or not. In the ballooning amount of money, you know, that, you know, the taxpayers are watching the stimulus bills come on trillions of dollars a year, and then VA is budget, which is what quadrupled. What's five times six? Quinn? Quinn tripled or something? It's a load of money. And, you know, how long are we going to be able to do that?

Dr. David Shulkin:

Yeah, I always said the problems that we had the VA, we're never because we didn't have enough money. And I didn't want people to misinterpret that, that I didn't want to make the right type of financial commitment to our veterans. But frankly, when you run organizations and I've been a CEO, private organizations for a long time. You know, the VA is problem just wasn't money. It was the right policies, the right management strategies, and frankly, sometimes having a defined budget makes you more efficient makes you have to make the tough decisions. But in the setting that we're in today, the VA just relies upon a big increase year after year. And so I think that there really is an obligation to relook at this system. We're going to talk about in this interview and ask about the issue of protests. The concept of a protest, when you lose a contract bid doesn't exist in the private sector. Yet in the federal government, this is a lengthy, costly process that just sometimes leads to a delay in services to veterans and a very expensive outcome. So I think this is an area that policy needs to be relooked at. and efficiency of top taxpayer dollars needs to be given a higher weighting in the matrix when you make Federal Procurement decisions.

Louis Celli:

No, I couldn't agree more. I've spent much of my professional career post military service advocating on behalf of the VA and their budget. But one of the things that that we have consistently said, as veterans is that VA really needs to be able to manage their budget efficiently. And you're right, it's not always about giving them more money. But it could be about having more money in the right places, maybe more money in prosthetics or more money in, in, in research and development?

Dr. David Shulkin:

Well, Lou, I would just, I would just say you got to take out the word more, you have to replace it with the appropriate amount, the right amount, because the commitment is to provide our veterans with world class services and the, you know, honoring the commitment that we all made to our veterans, there's no doubt about that. But in Washington, in particular, if you don't advocate for more money, you could be accused of not supporting veterans, I just think that's a false argument. What you need to be arguing for is using the money in the right place for the right things and most efficiently, and not be afraid to ask for more when you have to ask for more. But if we want to create a sustainable system, which we all do, particularly if you're going to maintain a voluntary military system, I think we have to start looking to be more efficient.

Louis Celli:

When efficiency is really one of the things that that I'd like to be able to talk about with our guest today. Miss Barbara ash, you know, we're going to talk about access to to procurement opportunities, we're going to talk about veterans and should they are Shouldn't they get priority? When it comes to contracting with VA? It happens that they do and why do they write? Is it just because we love veterans? We want to give them priority? I think it goes a little bit deeper than that. And that's that's a little bit of what we're going to hear today.

Dr. David Shulkin:

Well, I do think that's the right issue. You know, I don't like it when companies approached me when I was in office and said that they want to get business out of the VA. I really liked it when veterans came and said they're doing this because they want to give back to their brothers and sisters. And they understand how important it is to use these dollars the right way. So so I do believe that getting our veterans prepared to be ready to deal with the federal procurement system and being able to offer what they can offer is a really good outcome. And I know that our guest today is going to talk to us about that.

Louis Celli:

Mr. Secretary, I couldn't agree more. So let's get her in here.

Dr. David Shulkin:

Barbara, welcome to the policy vets podcast. And thanks for joining us today.

Barbara Ashe:

Well, thank you. It's just great to be here. And I you're talking about my favorite topic, veterans in procurement? Well,

Louis Celli:

I mean, it's safe to say that your federal procurement expert, you've taught hundreds of veteran businesses, business business owners, you know, on how to successfully navigate the federal procurement system. Can you tell us a little bit about the program, you know, how it runs, how you get started, and how you got involved in

Barbara Ashe:

it? Absolutely. So the veteran Institute procurement, or VIP, as we like to refer to it as a training program, offered a veteran owned businesses to accelerate their success in the federal sector. It was founded by myself, john and john Saqqara, who at the time was with Lockheed Martin and their supplier diversity, division and very King, who is the pret who was the president of catapult technologies, which added that time was one of the most successful service disabled veteran owned small businesses. And VIP started with a conversation with the simple desire to give back to our world. Veterans. Because you see, at the time, the federal government was not needing its 3% veteran service disabled veteran small business goals. Matter of fact, it was below 1%. And we were in the middle of two wars, record spending, we had never spent so much as a federal government, but yet we could not meet this goal. And when we reached out to buyers in government and industry and asked How can this be, we heard back that from them that the veterans weren't what they call procurement ready. And procurement ready isn't just understanding the far the Federal Acquisition Regulations, it's more comprehensive than that. It's it's really about how to compete compliant perform as a business and to consistently compete compliant performed successfully. And if you think about it, it makes sense why veterans didn't necessarily have all the knowledge in government contracting, because it's highly, you know, regulated, and it's a very competitive market. And while they were protecting our free enterprise that we enjoyed back home, their non veteran competitors were building their knowledge and relationships and business that while they were on the battlefield, so what we focus on and exactly what VIP does is train them on the knowledge and relationships, we turn to those experts that had developed knowledge over many years and decades and ask them to participate in VIP instruction, to share the secret sauce, the hard earned lessons learned over time on what it takes to compete, compliant perform. And they gave back readily. And so VIP training gives our veterans that speed of play, and provides them the knowledge and the key relationships to help them grow. And quite frankly, they don't have the advantage of time, they don't have the decades or 20 years to learn this. So by putting it all together for them, we give them the advantage of time and speed of play. So over these 27 hours of instruction, we will have over 30 instructors from industry and government provide briefings on over 20 topics. So the Veteran Business Owner walks away with not only the knowledge but the network of experts that they can reach back to as their companies develop in the market. And plus they're in a classroom with 49 other services able veteran owned small businesses, which then become mentors and relationships as well. So when they leave the program, they have over 100 people that they can now reach back to to help them navigate and grow in the federal market. Well,

Dr. David Shulkin:

Barbara, you know, we can tell your passion on this issue. And I think that's great. I know that when I was secretary, I really enjoyed speaking to veteran owned business owners and people that really had the passion to want to give back to their fellow veterans, but many of them thought it would be simple that if they knew what they were doing, or they had a good product or service that VA would just give them a contract. But of course, that's just not the case. So can you tell us just a little bit about what it takes to be successful in offering a service and getting selected to work at the VA?

Barbara Ashe:

Well, if at the VA, or really any, you know, federal agency, it's a highly regulated procurement process. And no, you can't ask for you know, you can't go up to the Secretary and you know, say, Hey, you know, isn't this a great product or service and Matter of fact, by doing so, you really, then present yourself as a, a less as a more risky choice to introduce you to so it is a you know, a very lengthy process. And it does require that you have the your business is who the government is contracting with. I know people do business with people, but they contract with businesses. And so your business has to have the infrastructure to support and give confidence to the acquisition representatives or, you know, whether it's the VA or any federal agency that you have the capacity and the capability to to perform. And many times these contracts are, you know, multi year over time, and they have to have that confidence that you can scale to that and have the procurement. So it's a lengthy process.

Louis Celli:

Yeah, but that's a great point. I mean, how much money are we talking about? Right? Well, what is the government actually buy?

Barbara Ashe:

Well, they spent the the numbers just came out, so $560 billion. And that's not even counting the Intel agencies that don't report numbers. And 145 billion was spent with small businesses. So that's real money. And, you know, they buy everything, they're the world's biggest customer. And some of the grads that have come through our program, you know, are, you know, building VA hospitals and maintaining the hospitals and staffing the hospitals, we have companies that prepare meals for sailors, on aircraft carriers, we have graduates that are have built our building quipment, for satellites that will help us better understand the impacts of climate change, we have veterans that are building better pilot seats on fighter jets, you know, they spent 10,000 hours in those seats, and they think they can be improved. So so the government, you know, buys everything, and, and it's the stakes are high, they're big customer. So there's a lot of competition going for those dollars.

Dr. David Shulkin:

Now, Barbara, veterans have a higher priority in selling to the government, particularly at VA. Why is that? And what are the laws that support the fact that veterans get preferences?

Barbara Ashe:

Well, you know, it, you know, first of all, it's, you know, it started at one, there's the law with the the federal government, the three, the 3% goal, but then at the VA, you know, the they have a special relationship with veterans. And they have a requirement that they the Rule of Two that they look to veterans first, which makes sense, because it aligns to their mission of veterans. So the VA is required in statute to look to veterans first, when buying goods and services. Does the

Louis Celli:

federal government you know, when Congress wrote this law, did they recognize veterans as a way to thank you for their service? Or is there is there a more complex reason why they singled out veterans as a as a priority group?

Barbara Ashe:

Well, it's a little boat, as I discussed, you know, veterans that are a distinct disadvantage, when starting a business, that knowledge and those resources and that net worth is gained over decades that you don't get over time. And of course, veterans do hold a special place in our hearts. And you know, 80% of our graduates are service disabled. So it's a little bit of for both columns, it's recognizing that they are at a disadvantage when it comes to business establishment, not having that benefit, while they were serving their country. And also, they held a special place in our hearts as in, we are very thankful for that.

Dr. David Shulkin:

Barbara, the contracting rules, the procurement regulations are clearly pretty complex. And so I imagine that there are times that people who are trying to contract with the government, either intentionally or maybe even often unintentionally, step outside the lines and find themselves being accused of fraud or criminal activity, even if they step too far out of bounds. How common is that? And how, how can we help people understand better what these rules say? And, you know, avoid somebody having finding themselves in legal trouble?

Barbara Ashe:

Well, you know, that, you know, there are millions of procurement transactions that take place. Um, and it's generally the exception to the rule. Um, you know, when you hear about these stories, it's it is, you know, highly regulated, and my biggest concern, and my biggest challenge actually, is when the other way around when companies don't understand what they're contracting for, with the federal government trouble. We spend a lot of time helping them, you know, decode the the many pages that will be in an RFP and where to look for the source and the regulations and how that's going to impact your company. Can you actually do it? Do you have the requirements? Do you have the certifications that are necessary to perform before you sign it? The government takes the tax dollars, responsibility quite seriously, which they should. And so the regulations are written the 1000 pages of the far written to really mitigate the risk to the federal government. And you need to understand that

Louis Celli:

Right, right. So so give us just like the The major topics right give us an overview rundown the major topics of what you teach these students so that they are procurement ready?

Barbara Ashe:

Well, you know, we focus on best business practices. And that starts with mitigating risk to themselves. First, they're teaming partners and the customers. And that starts with understanding, you know, the accounting, the legal, the finance, the cash flow, the certifications, the HR, the insurance, the operation and program controls. And if you don't portray, to a buyer, whether it's government or industry that you understand all those elements are fair, you understand them. And so it really touches all facets of a business.

Dr. David Shulkin:

Sounds like a very comprehensive set of skills. So I'm always being approached by veterans who say, look, I'd like that, I'd like to open up my own company, I'd like to help supply the VA with, you know, certain supplies or services. How hard is it to get started? If you've not done this before? And how long would it take to get started?

Barbara Ashe:

It depends, I would have to say that, you know, Federal Procurement is probably the hardest industry to enter. I don't think there's any other sector that I've ever been aware of that that is complex, it has the longest sales cycles that you can imagine the the the, the government can spend years developing the requirements, you'll spend 1000s of dollars, if not millions, pursuing an opportunity through the business development and capture process. And then the proposal process, it could some proposals are 1000 pages long, and only one usually wins. So you know, that's a lot of investment. So to get started, obviously, you don't start there. But the the government actually has an expectation that that you can do all that from day one, for don't even waste my time. You know, so it's important to understand not only the the customer, whether it's the VA God, EPA, but their mission and what the requirements are, but also can your company actually perform the work? At added incredible level of performance?

Louis Celli:

Yeah, so you talked earlier about licenses? I mean, so does it cost money to sell to the government? Do you have to buy a license in order to sell to the government or the other? The registrations? What is it? What does it take to? To do that?

Barbara Ashe:

It's it's frightfully easy? No, no, after what I just told you, right. So you can get yourself into, you know, a lot of trouble very quickly, you know, no, there are no fees, you just simply register and say you want to do business. Again, the onus is on you, all the requirements are there to protect the buyer, which is the government not to protect you from yourself. So, in the the the devil is always in the detail. So you know, in the you know, the opportunity that you're pursuing, it has all the things you must be able to do perform and requirements, and certifications. All of those things, though, are very expensive to implement within your company. Whether it's cybersecurity, you know, certifications, quality certifications, accounting systems, those all cost real money. But the the government doesn't chart on how you can now mind you simple procurements don't have as many requirements are, they're more complex. So you start where you do have capability and can perform and overtime, you have to make those investments in order to compete for the more technical or highly regulated, you know, requirements in some sectors.

Dr. David Shulkin:

One of the confusing things about the procurement process is you can go through this entire process and get awarded a contract. And then one of the groups that didn't win can actually challenge that decision and contest it. And that puts the whole process back in a somewhat in a starting place where you can't move forward. Does that make sense? Is that something that ended up that is good policy for taxpayers and for the agencies? Or is that something that you think needs to be changed?

Barbara Ashe:

Ah, boy, it's it's a mess. It really is. So it's expensive for everyone. Um, you know, certainly there are The The, the ability to protest is important. Sometimes it's why think every year most of the time there, you have to have good reason. But to your point, it does clog the wheels, it does cost money to do that. And I think if I had to go back to, you know, sort of why we're seeing more of that is that the acquisition workforce is not what it used to be, you know, even 20 years ago, in terms of the, the, the years of experience, the the training that's provided and the numbers. So a lot of procurements don't have the benefit of senior personnel with many years of experience developing this with, you know, a lot of good practical knowledge. And, you know, the, they don't have the experience necessary. And so not every procurement is maybe at what it needs to be. And it's, it's, it's a problem bid protests have become because it's very, it does clog everything up.

Dr. David Shulkin:

On your experience, how often are protests ultimately successful?

Barbara Ashe:

Gosh, it just depends, um, they not not, it's not the majority of the time, but sometimes protests are done, because the and I hate to say this, that, while it's in protest, you get to continue to do the work till it's settled. So you might just protest, so that you can continue to you're the incumbent, and you get to build. Um, so you know, when there's some work that needs to be done on that. And I think everybody agrees from government and industry standpoint, and that needs to be addressed. But

Dr. David Shulkin:

yeah, I'm not sure that there's a private sector comparison to that part of federal procurement.

Barbara Ashe:

No, no, not even close. Not at all. And it's very expensive to for any business, but in certainly a small business. And plus, you have to remember, there's always this concern, as a business, maybe not if you're one of the biggest in the country, but as a small business, will I upset, you got them? Oh, they're a problem. So a lot of protests don't get filed by small businesses that probably are legit, but out of money, because you do have to, you know, suit up for it. And also reputation that hasn't yet been built. You're still trying to build that that reputation? So? Um, yeah, it's that's I don't have, you know, the answer to how to fix it. But, but it needs to be addressed.

Louis Celli:

We could do a whole podcast on protests, Microsoft, Amazon. Right. So, but we're talking, you know, you talked a little bit about, you know, the expense. Let's talk just for a moment on federal spending. Right. So my very first testimony for the American Legion was back in 2012 2013. And I actually testified on the VA budget, that was my first testimony for them. At that time, the VA, his total budget was $60 billion. And, you know, I remember telling people, that's billion with a B, right? $60 billion, it was a lot of money. Va just submitted their budget request for 2022. And they asked for $270 billion. And while that sounds like a lot, it's really dwarfed by do DS request of $600 billion. I mean, based on your experience in this industry for so many years, are these numbers sustainable?

Barbara Ashe:

Well, ever since I've been doing this, which is a while federal spending has never gone down. Never. And, yes, it's sustainable, clearly. And thank goodness it is. And you know, we make you know, these investments we did you know, for example, 20 years ago in NIH on vaccine research, thank goodness we did, right. And, you know, now we're just ending the longest we have, you know, we need to take care of our veterans and, and that that can be quite expensive as well. And that's non negotiable. So, you know, and then we have threats globally from cybersecurity, to civilian migrations because of global unrest due to, you know, food deserts. And, yeah, we need to make those investments. And so I, I think the challenges are there and the government knows it needs to meet them.

Louis Celli:

I mean, all really good points. VA is a great example of that with their innovation, you know, being able to change medicine for the entire world. You know, but the people who read the papers read stories about $1,000, hammers and and $1,000.02 toilet seats. You know, we spent a year discussing the VA Medical Center in Denver that started out at $328 million and then ballooned up to was a one and three quarter billion dollars. I mean, how do you keep control of all that?

Barbara Ashe:

Well, you know, those are the outliers. You know, in procurements, you know, quite frankly, and, you know, time is money, and when, you know, projects have delays, and you know, specifications are changed, those usually hurt the customer, and I don't care who the customer is, but you know, it's going to cost more. But again, the, what I am more concerned about, and I think the bigger issue that we don't read in the paper is how, challenges to small businesses when, you know, they face changes in requirements and when work and because of that, they're, you know, they are they didn't understand the what they were getting into and bedded in properly. And, you know, didn't realize it costs more to hire a person, you know, from a healthcare, you know, to pay them fringe benefits in California than it does in Kansas. And now they're stuck. And, you know, there are supply change, you know, issues, but yet they're on the hook, you know, so usually, you know, the, those are the outliers, but but usually businesses have to, to eat quite a bit of the disruption in the market when, you know, changes are made to employment law. And they have contracts, long term contracts that they are on the hook to provide a fixed price. So

Dr. David Shulkin:

Barbara, is your program restricted to veterans only,

Barbara Ashe:

it is it is restricted to veteran own and service disabled veteran owned small businesses. We have over 1700 graduates from all 50 states, DC, Guam and Puerto Rico, and they attend at no cost nationwide. We have very generous grant from SBA, Lockheed Martin, JPMorgan Chase many of our VIPs or successful give back and pay it forward for their federal veterans. So we can put the point out is elections we think of, you know, we focus on the veteran, but VIP focuses on the Veteran Business. And so you, your company applies to attend VIP, and it is your company is the one that's getting accepted based on its development in the federal space. So we focus on the Veteran Business as as an entity, and making sure it has what it needs to compete and win in the federal market.

Louis Celli:

So So with that, because we are we are getting close on time, but I wanted to give you an opportunity to let people know where to go to find you. Right. So all of this education that that you know, that you're able to offer is, is any of it online? Do you have give a website that you can refer them to?

Barbara Ashe:

Yeah, well, all of our training is in a classroom. So it's not, you know, during the pandemic, we did do it virtually. But we're going back into the classroom. But yes, our website at National vip.org is where you can get more information and also apply all of our applications are online for our different curriculums. And, of course, they can always reach out to me My contact information is on the website, as well at bieniasz National national VIP org and happy to answer any questions they have. And and I encourage veterans to take advantage of this great resource. You know, I, I, you know, over $16.9 billion has been awarded in prime awards to VIP grads. And we we take it very seriously on how to arm them to win in the federal market.

Louis Celli:

And does your program cost anything? Nope. Veteran that is nothing. That's

Barbara Ashe:

right. Nothing to the veteran. So that's right. There is no cost. We never charge you and we're not a membership organs. There's no reach back. It's It's It's how it's a how we are giving back to the veteran so that they can participate in in business and in federal contracting. And they are really, you know, uniquely qualified to support the mission of government. They used to work for the government.

Louis Celli:

It's actually it's actually a program of the Montgomery County Chamber of Commerce, isn't it?

Barbara Ashe:

Well, it's in our foundation. It's in our foundation, right. So when I'm president of that foundation, but you know it, it came out of really, you know, what we do here and around the Beltway where we're located as government contracting, and we know what it takes to win. And, and so we took that expertise, and wanted to help our veterans and for the federal government to meet the goal, and they have ever since.

Louis Celli:

Barbara, thank you so much. Thank you.

Dr. David Shulkin:

I do Barbara.

Louis Celli:

Well, that Really is all the time that we have for this week. Hey, listen. Join us next week when we're going to have on a very special guest. Mr. Sherman Gilliam's is the chief strategy and Operations Officer for the National Alliance on Mental illness. He used to be the Executive Director for Paralyzed Veterans of America worked for DMV, and is by far one of the most knowledgeable people on Veterans policy in this industry. If you haven't heard of Sherman Gilliam's before now, you will definitely remember him after next week. We'll see you then.

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